SSGC suffers massive loss of Rs11.4bn in FY22

November 20, 2023 (MLN): Sui Southern Gas Company Limited (PSX: SSGC) unveiled its profit and loss statement for FY22, wherein the loss after tax clocked in at 11.41 billion [LPS: Rs12.95], compared to a profit of Rs2.26bn [EPS: Rs2.57] in FY21.

Going by the results made available by the company on the PSX, the company's top line rose by 10.37% YoY to Rs299.63bn as compared to Rs271.49bn in SPLY.

In the review year, the tariff adjustments stood at Rs75.93bn, which was more than three times the recorded adjustments in FY21.

The cost of sales rose slightly to Rs367.84bn in FY22 as compared to Rs301.88bn in FY21.

Resultantly, the company was able to generate a gross profit of Rs7.72bn as compared to a gross loss of Rs5.75bn incurred in FY21.

During the period under review, the company's other income decreased by 8.46% YoY to stand at Rs17.63bn in FY22 as compared to Rs19.26bn in SPLY.

On the expenses side, the company recorded administrative expenses of Rs5.25bn, other operating expenses of Rs20.42bn, and allowance for expected credit loss worth Rs2.12bn.

The company’s finance costs went up by 12.33% YoY and stood at Rs5.2bn as compared to Rs4.63bn in FY22, mainly due to higher interest rates.

On the taxation front, the company booked a tax credit of Rs3.77bn as against a tax paid worth Rs687.66 million in FY21.

Amount in thousand except for EPS

Moreover, the company also disclosed that their unconsolidated financial statements included trade debts consisting of receivables of Rs29.65bn and Rs25.3bn from K-Electric Limited (KE) and Pakistan Steel Mills Corporation (Private) Limited (PSML), respectively.

A significant portion of such receivables include overdue amounts, which have been considered good by management and classified as current assets in the unconsolidated financial statements.

Further, KE and PSML have disputed Late Payment Surcharge (LPS) on their respective balances due to which management has decided to recognize LPS on a receipt basis from the aforesaid entities effective from July 01, 2012.

Due to the adverse operational and financial conditions of PSML, disputes by KE and PSML with the Company on LPS, and large accumulation of their respective overdue amounts, the company was unable to determine the extent to which the total amounts due from KE and PSML were likely to be recovered including the timeframe over which such recovery will be made

Additionally, interest accrued included interest receivable of Rs.10.96bn and Rs5.1bn from Sui Northern Gas Pipeline Limited (SNGPL) and Water and Power Development Authority (WAPDA), respectively.

These have been accounted for in line with the company's policy of charging LPS on overdue amounts, but have not been acknowledged by the counter-party.

Due to a dispute with WAPDA and SNGPL, and the large accumulation of their respective overdue amounts of interest, the company was unable to determine the extent to which the interest accrued amounts due from SNGPL and WAPDA are likely to be recovered including the timeframe over which such recovery will be made.

Emphasis of matter

In view of the financial position of the company, the Government of Pakistan (Finance Division) has confirmed to extend necessary financial support to the company for the foreseeable future to maintain its going concern status.

Hence, the sustainability of the future operations of the company is dependent on the said support;

The company has not recognized the accrued markup up to June 30, 2022, amounting to Rs132bn relating to Government Controlled E&P Companies based on government advice and a legal opinion, which is subject to various material litigations and claims pending adjudication in different courts.

The outcome of these cases is uncertain and beyond management's control.

Furthermore, the adjustment/realisability of receivable of the company from Habibullah Coastal Power Company (Private) Limited (HCPCL) amounting to Rs4.16bn is no longer possible and accordingly is recognized as other operating expense as of the reporting date.

The company is in the process of filing the motion for review for FY 2021-22 and included the amount so charged in the tariff determination before OGRA.

Copyright Mettis Link News